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FOREX-Dollar hits 5-month low on US debt worries, Yosano

Published 05/21/2009, 08:57 PM
Updated 05/21/2009, 09:08 PM

* Dollar index slides to lowest in almost 5 months

* Dollar hits 2-month low vs yen

* Euro rises to its strongest since early Jan vs dollar

* Japan's Yosano says not thinking about forex intervention

By Rika Otsuka

TOKYO, May 22 (Reuters) - The dollar fell to its weakest in almost five months against a basket of major currencies on Friday as concerns about growing U.S. government debt prompted investors to sell dollar assets from stocks to bonds.

The dollar hit a two-month low against the yen after Japanese Finance Minister Kaoru Yosano said the country is not thinking about intervention in the currency market.

The U.S. currency came under pressure the previous day after Standard & Poor's said it could downgrade Britain's triple-A credit rating, sparking fear the United States may face the same predicament.

"S&P gave a clear criteria that a country whose government debt burden is approaching 100 percent of GDP could have its rating downgraded. That prompted investors to think they should not be so optimistic about credit rating on the United States," said Hideki Amikura, deputy general manager of forex trading at Nomura Trust and Banking.

The dollar index, a gauge of the greenback's performance against six major currencies, fell as low as 80.257, its weakest since late December.

Bill Gross, manager of the world's biggest bond fund, warned that the United States will eventually lose its top credit rating, a fear that could keep the dollar, stocks and bonds under heavy selling pressure.

The dollar slipped 0.3 percent from late U.S. trade to 94.08 yen after falling as low as 93.86 yen on trading platform EBS, its lowest since mid-March.

The euro rose 0.4 percent to $1.3945, its strongest since early January.

Sterling rose as high as $1.5893, its highest since early November, according to Reuters data. Sterling then dipped to $1.5885, up 0.2 percent on the day. (Additional reporting by Satomi Noguchi; Editing by Jan Dahinten)

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